TNT India Forays Into Logistics Management

TNT India Ltd, a wholly-owned subsidiary of Amsterdam-headquartered $11.7 billion TPG NV, has decided to enter the logistics market in a big way, thereby expanding its portfolio of express and mail services.

Says TNT India managing director Jinendra Sancheti: Were in the last stages of finalising an alliance with a strategic partner (which has strengths in the local market) to boost our presence in the high-value logistics business.

TNT India expects logistics and express to account for 45 per cent each of its overall revenues while maintaining revenues from mail at around five per cent by 2007.

Currently, express business accounts for around 90 per cent of TNT Indias revenues with logistics and mail contributing five per cent each. As per the companys internal estimates, the company commands around a fifth of the Indian express market.

The company kicked off its logistics operations around five months ago. TNT is expected to formally announce the development shortly.

Last year, TNT worldwide secured revenues of around $3.8 billion from logistics of its overall revenues of $11.7 billion.

Having established ourselves in the corporate segment, were sharpening a retail-focussed strategy to address a broader non-regular user segment, says Mr Sancheti. Were looking at opening smaller outlets for a cross-section of non-regular users.

In the next couple of years, TNT India expects the share of the retail business to grow to 25 per cent of its overall revenues from 10 per cent at present. In the last two years, the contribution of the retail segment to its overall revenues has already jumped from a low of four per cent to 10 per cent at present.

In recent years, TNT has developed retail-specific packages like Scholar Packs (aimed at over a lakh Indian students applying for foreign universities every year), Special Services (for first-time participants in international trade fairs and exhibitions) and Rakhi Packs.

Now the company is extending its new global focus on fast-growing segments like biotechnology and pharmaceuticals to the Indian market.

More and more students, including a large number of undergrads, are applying for courses abroad these days. This market is growing at the rate of over 20 per cent a year, says Mr Sancheti. Even in the corporate segment, we are seeing greater use of direct mailing as a direct mailer is more likely to be opened than an Internet-mail.

TNT worldwide is expecting a turnover growth of 8-10 per cent this calender year. Against a tough market environment following 9/11, TNT worldwide posted 10 per cent growth last year.